Loyalty Today

There is No Customer Loyalty. Only Loyal Tendencies.

Why retailers need to move away from "Us Too" rewards programs that divide loyalty and focus on the customer engagements that improve the loyalty KPIs that matter most.

I frequently shop at two nearby sporting goods retailers and thanks to my wife, am a registered loyalty program member for each. Let that sink in a minute. I am loyal to two competing businesses that sell exactly the same products. Would my wife consider me faithful if I had another wife across town? My wife tolerates many things, but this she would not abide.

So why do successful businesses endure these open relationships, where significant others freely and without consequence disregard their loyal standing with one proprietor so they can spend with another? I won’t pretend to know the exact reason; more likely than not there is a hodgepodge of justifications for launching or maintaining a typical rewards program that strives for true loyalty while settling for far less. The more interesting question is what businesses should do within the framework of customer loyalty to lower their cost of customer acquisition, grow wallet share, and increase frequency of purchases. This is where a typical rewards program with ~3% return on every dollar spent – and comparable to a competitor’s program – will do nothing to move the needle for the metrics that truly matter.

SO WHAT SHOULD LOYALTY MARKETERS DO?

For starters, they need to accept reality – There is no customer loyalty. Only loyal tendencies.

Next, they need to take an honest look at the individual touchpoints that collectively represent their loyalty program and ask, Does this improve any of the metrics I care about? If the answer is unclear, then it should be scored the same as a no. If you can’t articulate a tangible business uplift to your CEO and CFO, it doesn’t exist.

For the touches that can be scored positively, they need to consider what would help them perform even better. For example, how aligned are email promotions and loyalty members? Of my two preferred sporting goods stores, I receive no emails from one* and nothing but generic, big discount offers from the other. As a husband and father of 2 active kids, my household should be a high value target thanks to our shared interests across personal fitness, gymnastics, little-league baseball, and our favorite local sports teams. We are an abundance of engagement opportunities and yet, at no point have I received from either party a pending birthday reminder with a timely offer to do some gift shopping. If neither of them is going to value my membership – and the fact that most dads usually need a friendly reminder! – then where’s the incentive for me to be loyal?

Finally, and arguably the most important step, they should identify the missing pieces that leave their loyalty program chugging along in mediocrity. For many strategic marketers, this part is easy as they already have a wish list for enhancements. For others, this is uncharted territory and requires fresh thinking – probably executive sponsorship too! But once the mantra There is no customer loyalty, only loyal tendencies is embraced, it becomes easier to think about various customer journeys and spot new opportunities for driving the customer behavior that directly impacts key, measurable outcomes. Achieving this mindset means being an active loyalty marketer, one who is perpetually improving program performance.

Loyal tendencies are a blessing and a curse marketers wrestle with daily. They can help as much as hurt, with customers leaving to try other competitors as new ones visit and make a first time purchase. The challenge is to reset your priorities on the KPI’s you and your leadership care about and put the processes in place to win those head to head battles where “loyal” members are on the fence.

*There is a chance I opted out of receiving emails early on and just don’t remember. However, opting out is predictable behavior when trying to onboard new loyalty program members and any active loyalty marketer will have a cache of relevant engagements to deploy to constrain this performance killer.